Thank You

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Thanks for nothing! The formerly bankrupt, formerly destitute, formerly craven gambling company called AIG goes on TV to say, "Thank you, America" for its bailout in 2008. Don't thank us, AIG; we didn't want to do it, even though our taxes and our national credit rating were used to preserve the illusion of your value and the illusion that the world financial system was tied to your tail.

Equally, we don't thank AIG for managing over the past four years to sell assets and restructure itself so that the U.S. Treasury could report a $23 billion gain on the deal—which it keeps referring to as a profit for us taxpayers, even though we will never see a penny of it.

When the U.S. government panicked in the Panic of '08, the so-called rescue of AIG was its largest, most imprudent, and most inappropriate action, even worse than its similar rescue of General Motors and Chrysler. Acting without the judgment of a bankruptcy court, the Fed and the Treasury provided AIG with $125 billion in debtor-in-possession financing to keep the company afloat, and said they would provide as much more as necessary. Then the Treasury confiscated 92% of the company's shares and called the transaction an investment.

The shareholders, led by former CEO Maurice "Hank" Greenberg, are now suing the government on that takeover, claiming it violated the Fifth Amendment by taking their private property for public use without just compensation.

They have a point, though it looks like the legendary case of the man who killed his mother and father and threw himself on the mercy of the court because he was an orphan.

It does appear that the government forced American International Group to rescue its endangered counterparties, and that could be an improper public use of company assets. But if the government had let AIG file for bankruptcy and liquidate in the usual way, the shareholders now would have nothing.

Just because the Treasury acted improperly does not mean the shareholders should be compensated, and just because the shareholders should not be compensated does not mean the Treasury acted properly.

Everybody involved, from Fed Chairman Ben Bernanke and Treasury Secretary Timothy Geithner on down to Greenberg and AIG's current CEO, Robert Benmosche, should just dry up and blow away. AIG's directors, who were too frightened of Washington to join Greenberg's suit in the interest of the shareholders they supposedly represent, should continue to dismember the company, selling it off piece by piece until there's nothing left but the smile.

The AIG "rescue" was a shameful episode in U.S. financial history, one that will come back to haunt the taxpayers and the government's creditors the next time an insurance company, a bank, a nonbank, a government-sponsored enterprise, or a Ponzi scheme seems too big to fail and too big to dismember, and is assuredly too big to succeed.

Triumph of Consumer Sovereignty

The FTC lets Google mind its own business

After two years of investigation, the Federal Trade Commission has reached the stunning conclusion that Google knows how to run its business. The commission let the company off with a nonbinding nonorder covering only negligible parts of the business practices that Google used to combine Internet searching with Internet advertising and dominate both spheres.

According to Google's critics, the search engine unfairly features the company's own products, such as Google Shopping, and its advertisers' products.

Unlike the process in many past antitrust investigations, the FTC actually tried to answer the right question. That it failed, and admitted failing by a 5-0 vote, is a positive legal milestone, equal to the negative precedent set by the Justice Department in its pointless pursuit of Microsoft over a decade ago.

The question that the FTC could not answer was whether Google harmed any consumers—the people who choose to Google stuff with Google's search engine and who click through to buy advertised products.

Said the FTC: "The evidence presented at this time does not support the allegation that Google's display of its own vertical content at or near the top of its search-results page was a product-design change undertaken without a legitimate business justification. Rather, we conclude that Google's display of its own content could plausibly be viewed as an improvement in the overall quality of Google's search product."

The commission noted, although indirectly and perhaps reluctantly, that sovereign consumers have awarded Google its dominant position.

Unfortunately, the European Commission and other legal beagles also are on Google's case, and, as it usually does, the EC is asking the wrong question. The EC absurdly wants to know if Google's actions harmed its competitors—other search engines, other advertising media, other commercial Websites.

Of course, the dominant company in a marketplace has harmed its competitors—it would be derelict if it did not always try to satisfy its customers better than the others do. But the EC calls this "abuse of dominance." It fails to understand that Google achieved and maintains its dominance by satisfying consumers.

In no way are consumers locked in to using Google: They pay nothing to use the search engine and could adopt another one at any time, just as millions of users adopted Google in the 1990s because they were dissatisfied with other free search engines, such as the now forgotten Excite, AltaVista, Lycos, and Infoseek.

If consumers ever become dissatisfied with Google's search engine and its other services, they know what to do about it.

Ironically and outrageously, one of those competitors leading the charge against Google has been Microsoft—apparently attempting to do unto Google what the Justice Department did to Microsoft.

Microsoft should know better than any other company how much harm trustbusters can do to a successful enterprise. "Misery loves company" is no excuse